Crude oil prices extended gains Tuesday as the Trump administration's sanctions against Tehran kicked in, setting the stage for a drop-off in production from the world's fifth-largest producer. Meanwhile, the production of Syncrude Canada's offline on its sands facility is impacting the market.
Futures in NY were little changed after sliding 3.2% on Wednesday. The average North Sea Brent mix at the Intercontinental Exchange (ICE) in London reached US$74.95 per barrel, down by US$0.99 only compared with previous month's trading.
On top of the impact on the broader global economy, there is growing worry in the crude oil market about Chinese demand.
American oil giant Exxon Mobil Corp.is said to be courting Asian refiners with rare long-term US crude export deals in a bid to expand its trading scope.
The Asian country buys roughly 11% of Iranian crude exports, and because of the threat of secondary sanctions, it's reportedly looking for alternative supplies.
Prices of the barrel of the American reference for the sweet light crude oil are falling further today, breaking below the $68.00 mark per barrel.
While the trade war and the USA inventories report dragged oil prices down on Wednesday, for the coming months, investors, traders, and analysts expect the return of the US sanctions on Iran to continue keeping a floor under the price of oil. The crude oil imports maintained the same levels during the last two weeks.
USA exports rose 540,000 bpd in the week to 1.9 million bpd.
It noted that Iran's oil exports fell last month as several European countries reduced purchases and South Korea cut them completely.
That's all occurring as global oil investors are grappling with doubts over how demand will be affected by flaring trade tensions between the US and China, the prospect of lower exports from Iran due to American sanctions, uncertainty about Saudi Arabia's output strategy and a fall in stockpiles at the storage hub in Cushing, Oklahoma. OPEC and Russian Federation reported an increase in their output by 300,000 and 150,000 barrels per day in July, respectively. Gasoline inventories increased by 3.1 million barrels and distillate stockpiles rose by about 1.8 million barrels. Before proceeding towards technical outlook, let us recall that the WTI prices were trading under a selling pressure as trade tensions between the United States and China have heated up. Friday's Baker Hughes crude oil rig count was down slightly from last week, reducing the number of oil rig counts from 861 to 859. The differential was 4.72 dollars at the end of the week.
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